U.S. BUREAU OF LABOR STATISTICS
GLOSSARY
TABLE 2
Fee-for-service health care plan. In
fee-for-service plans, a premium is paid
to a private insurance carrier to provide
a specific package of health benefits. The
plan only finances, it does not deliver, the
health care services. Some employers may
choose to self-fund a fee-for-service plan
in which case the employer, as opposed to
an insurance company, assumes responsibility for payment of physician or hospital
services.
In-network provider. An in-network
provider is a group of hospitals and
physicians that contract with an insurance company to provide comprehensive
medical services. Many plans require the
plan participant to go to these providers
to get coverage. Other plans will allow
the participant to receive medical services
outside the network from out-of-network
providers at a higher cost. Preferred provider organizations, point-of-service, and
exclusive provider organization medical
plans will have incentives, and in some
cases, require the participant to use innetwork providers. A traditional fee-forservice plan will not have a network, so
patients may visit the physician or hospital
of their choice.
Access to a benefit plan. Employees are
considered to have access to a benefit plan
if it is available for their use. For example,
if an employee is permitted to participate
in a medical care plan offered by the
employer, he or she is placed in a category
with those having access to medical care,
regardless of whether he or she chooses to
participate.
Deductible. The deductible is the amount
of covered expenses that an individual or
family must pay before any charges are
paid by the medical care plan. Deductibles
that apply separately to a specific category
of expenses, such as deductible for each
hospital admission, are excluded.
Coinsurance. Coinsurance is the percentage of covered health care costs that the
plan pays during the plan year until the
participant reaches the out-of-pocket
maximum.
Out-of-pocket maximum. The out-ofpocket maximum is the annual limit of
covered expenses that a participant or
family must pay after the deductible has
been satisfied. Once reached, covered expenses are fully reimbursed by the insurer
for the rest of the year.
www.bls.gov/ebs
PERSPECTIVES
ROGRAM
Median coinsurance rates for fee-for-service plans,
private industry, National Compensation Survey,
2008, in percent
Variable coinsurance
Fixed
coinsurance
In-network
Out-of-network
80
80
60
Union workers
80
85
70
Nonunion workers
80
80
60
Full-time
80
80
60
Part-time
80
80
60
Characteristic
All workers
VOL. 2, ISSUE 5
OCTOBER 2010
FEE-FOR-SERVICE PLANS
By bargaining status
Features and associated
costs of fee-for-service
medical plans
By full-time/part-time status
annual individual out-of-pocket
maximum. For all private industry
workers, the median individual
out-of-pocket maximum is $2,000,
and the 10th to 90th percentile
values are $800 and $3,500,
respectively. (See table 1.) The
median individual out-of-pocket
maximum for full-time workers
is $2,000, and the median family
out-of-pocket maximum is $4,000,
while for part-time workers the
median is $1,700 for individual
and $3,500 for family. Union
workers have a median individual
out-of-pocket maximum of $1,750
and a median family out-of-pocket maximum of $4,000, while the
median for nonunion workers is
$2,000 for individual and $4,000
for family. Once the out-of-pocket
maximum is reached, the insurer
pays all covered expenses until
the end of the plan year. ●
n 2008, medical care benefits
I
NATIONAL
COMPENSATION
SURVEY
www.bls.gov/ ebs
Benefit Series
HEALTH
The next Program Perspectives will feature
defined contribution retirement plans.
For additional assistance on
benefits, contact one of our
information offices:
REGIONAL:
ATLANTA
(404) 893-4222
NATIONAL: WASHINGTON, DC
BOSTON
(617) 565-2327
CHICAGO
(312) 353-1880
(202) 691-6199 TDD: (800) 877-8339
[email protected] www.bls.gov/ebs
RETIREMENT
BY WAGE LEVEL
NEW YORK
(646) 264-3600
SICK LEAVE
PHILADELPHIA
(215) 597-3282
DEFINED-BENEFIT PLANS
SAN FRANCISCO
(415) 625-2270
DEFINED-CONTRIBUTION PLANS
COMBINED BENEFITS
DALLAS
(972) 850-4800
KANSAS CITY
(816) 285-7000
PAID LEAVE
FEE-FOR-SERVICE
PLANS
FEE-FOR-SERVICE
PLANS
BUREAU OF LABOR STATISTICS
U.S. DEPARTMENT OF LABOR
LIFE/DISABILITY INSURANCE
were available to 71 percent
of private industry workers
through their employers. Feefor-service medical plans make
up the majority (78 percent)
of employer provided medical
plans in private industry. Health
maintenance organizations
(HMOs) (both traditional and open
access) make up the remaining 22
percent. This issue of Program
Perspectives takes a closer look
at the components of private
industry fee-for-service plans and
what the typical provisions and
costs are for each component.
Fee-for-service medical plans
come in several forms, the most
common type is preferred provider
organizations (PPOs), but other
forms include point-of-service,
exclusive provider organizations,
and traditional plans without
networks. In addition to annual
premiums (the costs of which are
usually shared by employer and
employee), a fee-for-service plan
typically requires the worker to
pay an annual deductible before
the plan pays for medical coverage.
After the deductible is reached,
the medical plan pays a percentage
of costs, called coinsurance, and
the worker must pay the health
care provider the remaining
percentage until the worker
reaches an annual out-of-pocket
maximum, after which the plan
pays 100 percent of most charges.
This issue includes median costs
(the point where half of the workers have a cost that is at or below
that level and half of the workers
have a cost that is at or above that
level) and percentiles—rather than
averages—because averages are
continued inside
►
TABLE 1
CHART 1
Percent of workers with access to medical care benefits, private industry,
National Compensation Survey, March 2008
Annual individual and family deductibles for fee-for-service medical plans, private
industry, National Compensation Survey, 2008
Individual
Workers
All
workers
Union
Nonunion
Fulltime
Parttime
All
workers
Union
Nonunion
$150
$150
$200
$200
$100
$450
$300
$500
$450
$500
500
275
500
500
400
1000
600
1000
1000
1000
1500
750
1750
1500
1000
4000
2000
4000
4000
3000
10
$800
$750
$800
$800
$750
$2,000
$1,500
$2,000
$2,000
$1,500
Median
2000
1750
2000
2000
1700
4000
4000
4000
4000
3500
90
3500
3300
3500
3500
3500
7200
7200
7200
7200
7000
Percentile
All
Union
Deductibles
Nonunion
Median
10
90
Full-time
Fl l
Family
Parttime
Full-time
Out-of-pocket maximums
Part-time
0
20
40
60
80
100
Percent
from cover page
►
affected more by very large individual costs making comparisons
more difficult. At the 10th percentile, 10 percent of the workers have
a cost that is at or below that level,
while 90 percent are at or above it.
At the 90th percentile, 90 percent of
the workers have a cost that is at or
below that level, while 10 percent
are at or above it. The two percentiles provide a range that represents
the individual costs for 80 percent
of workers that have a medical plan
with the particular plan feature
being discussed. Estimates in this
issue are from the Bureau of Labor
Statistics National Compensation
Survey: Health Plan Provisions
in Private Industry in the United
States, 2008 and Employee Benefits
in the United States, March 2008
2 PROGRAM PERSPECTIVES • OCTOBER 2010
(on the Internet at www.bls.gov/
ncs/ebs/detailedprovisions/2008/
ebbl0042.pdf and www.bls.gov/
ncs/ebs/sp/ebnr0014.pdf). Estimates on premium costs—for
single and family coverage—are
available at www.bls.gov/ncs/ebs/
benefits/2008/benefits_health.htm.
How much are
deductibles?
Most (93 percent) workers with
fee-for-service plans are required to
pay an annual deductible before the
plan pays for medical expenses. The
deductibles for both individual and
family coverage vary by medical
plan. The median individual deductible for all private industry workers
is $500, while the 10th percentile
is $150, and the 90th percentile is
$1,500. For families, the median
deductible is $1,000, with the 10th
percentile at $450, and the 90th percentile at $4,000. (See table 1.)
Deductibles tend to be lower for
union workers than for nonunion
workers. For example, the median
individual deductible for union
workers is $275, and the median
individual deductible for nonunion
workers is $500. Union workers
also have lower family deductibles
than nonunion workers. Family
deductibles range from $300 at the
10th percentile to $2,000 at the 90th
percentile for union workers, lower
than nonunion workers, whose
deductible percentiles are $500 and
$4,000, respectively. Additionally,
union workers are more likely to
have access to employer-provided
health care benefits than nonunion
workers. In the private industry, 88
percent of union workers have access, compared with 69 percent of
U.S. BUREAU OF LABOR STATISTICS
nonunion workers. (See chart 1.)
Part-time workers have individual
deductibles ranging from $100 at
the 10th percentile to $1,000 at the
90th percentile; while for full-time
workers, the amounts are $200 and
$1,500 respectively. However, parttime workers are far less likely to
have access to employer-provided
medical care. Eighty-five percent of
full-time private industry workers
have access to medical care through
their employers, while only 24
percent of part-time workers benefit
from that access.
What happens
when the deductible
is reached?
After the deductible is reached,
plans typically pay a percentage of
authorized expenses, called coinsurance, for the remainder of the plan
year. Coinsurance can be fixed or
www.bls.gov/ ebs
variable. When a plan has a fixed
coinsurance, it pays the same percentage of the cost for any covered
service. In plans with variable coinsurance, the insurer pays a higher
percentage for services received
from an approved in-network provider than for services received by
out-of-network providers not on the
approved list. The median fixed coinsurance is 80 percent for all private
industry workers, regardless of union
status and for both full and part-time
workers. In these plans, the health
insurance company pays 80 percent
of the costs for medical care services, while the worker must pay the
remaining 20 percent. (See table 2.)
For plans with variable coinsurance, the median in-network coinsurance for all private industry
workers is 80 percent, and median
out-of-network coinsurance is 60
percent. Full-time workers, parttime workers, and nonunion work-
ers all have a median in-network
coinsurance of 80 percent and a median out-of-network coinsurance of
60 percent. The median in-network
coinsurance for union workers is
85 percent, and the out-of-network
median coinsurance is 70 percent,
which is higher than the 60 percent
median coinsurance that nonunion
workers receive. Therefore, if union
workers decide to use a provider
outside the insurer approved network, the insurer will, on average,
pay a higher percentage and the
union worker will pay a lower percentage than for a nonunion worker.
What is the out-ofpocket maximum?
Workers must continue to pay
for a percentage of their medical care cost until they reach the
yearly out-of-pocket maximum.
Eighty-one percent of workers
with fee-for-service plans have an
OCTOBER 2010 • PROGRAM PERSPECTIVES
3
TABLE 1
CHART 1
Percent of workers with access to medical care benefits, private industry,
National Compensation Survey, March 2008
Annual individual and family deductibles for fee-for-service medical plans, private
industry, National Compensation Survey, 2008
Individual
Workers
All
workers
Union
Nonunion
Fulltime
Parttime
All
workers
Union
Nonunion
$150
$150
$200
$200
$100
$450
$300
$500
$450
$500
500
275
500
500
400
1000
600
1000
1000
1000
1500
750
1750
1500
1000
4000
2000
4000
4000
3000
10
$800
$750
$800
$800
$750
$2,000
$1,500
$2,000
$2,000
$1,500
Median
2000
1750
2000
2000
1700
4000
4000
4000
4000
3500
90
3500
3300
3500
3500
3500
7200
7200
7200
7200
7000
Percentile
All
Union
Deductibles
Nonunion
Median
10
90
Full-time
Fl l
Family
Parttime
Full-time
Out-of-pocket maximums
Part-time
0
20
40
60
80
100
Percent
from cover page
►
affected more by very large individual costs making comparisons
more difficult. At the 10th percentile, 10 percent of the workers have
a cost that is at or below that level,
while 90 percent are at or above it.
At the 90th percentile, 90 percent of
the workers have a cost that is at or
below that level, while 10 percent
are at or above it. The two percentiles provide a range that represents
the individual costs for 80 percent
of workers that have a medical plan
with the particular plan feature
being discussed. Estimates in this
issue are from the Bureau of Labor
Statistics National Compensation
Survey: Health Plan Provisions
in Private Industry in the United
States, 2008 and Employee Benefits
in the United States, March 2008
2 PROGRAM PERSPECTIVES • OCTOBER 2010
(on the Internet at www.bls.gov/
ncs/ebs/detailedprovisions/2008/
ebbl0042.pdf and www.bls.gov/
ncs/ebs/sp/ebnr0014.pdf). Estimates on premium costs—for
single and family coverage—are
available at www.bls.gov/ncs/ebs/
benefits/2008/benefits_health.htm.
How much are
deductibles?
Most (93 percent) workers with
fee-for-service plans are required to
pay an annual deductible before the
plan pays for medical expenses. The
deductibles for both individual and
family coverage vary by medical
plan. The median individual deductible for all private industry workers
is $500, while the 10th percentile
is $150, and the 90th percentile is
$1,500. For families, the median
deductible is $1,000, with the 10th
percentile at $450, and the 90th percentile at $4,000. (See table 1.)
Deductibles tend to be lower for
union workers than for nonunion
workers. For example, the median
individual deductible for union
workers is $275, and the median
individual deductible for nonunion
workers is $500. Union workers
also have lower family deductibles
than nonunion workers. Family
deductibles range from $300 at the
10th percentile to $2,000 at the 90th
percentile for union workers, lower
than nonunion workers, whose
deductible percentiles are $500 and
$4,000, respectively. Additionally,
union workers are more likely to
have access to employer-provided
health care benefits than nonunion
workers. In the private industry, 88
percent of union workers have access, compared with 69 percent of
U.S. BUREAU OF LABOR STATISTICS
nonunion workers. (See chart 1.)
Part-time workers have individual
deductibles ranging from $100 at
the 10th percentile to $1,000 at the
90th percentile; while for full-time
workers, the amounts are $200 and
$1,500 respectively. However, parttime workers are far less likely to
have access to employer-provided
medical care. Eighty-five percent of
full-time private industry workers
have access to medical care through
their employers, while only 24
percent of part-time workers benefit
from that access.
What happens
when the deductible
is reached?
After the deductible is reached,
plans typically pay a percentage of
authorized expenses, called coinsurance, for the remainder of the plan
year. Coinsurance can be fixed or
www.bls.gov/ ebs
variable. When a plan has a fixed
coinsurance, it pays the same percentage of the cost for any covered
service. In plans with variable coinsurance, the insurer pays a higher
percentage for services received
from an approved in-network provider than for services received by
out-of-network providers not on the
approved list. The median fixed coinsurance is 80 percent for all private
industry workers, regardless of union
status and for both full and part-time
workers. In these plans, the health
insurance company pays 80 percent
of the costs for medical care services, while the worker must pay the
remaining 20 percent. (See table 2.)
For plans with variable coinsurance, the median in-network coinsurance for all private industry
workers is 80 percent, and median
out-of-network coinsurance is 60
percent. Full-time workers, parttime workers, and nonunion work-
ers all have a median in-network
coinsurance of 80 percent and a median out-of-network coinsurance of
60 percent. The median in-network
coinsurance for union workers is
85 percent, and the out-of-network
median coinsurance is 70 percent,
which is higher than the 60 percent
median coinsurance that nonunion
workers receive. Therefore, if union
workers decide to use a provider
outside the insurer approved network, the insurer will, on average,
pay a higher percentage and the
union worker will pay a lower percentage than for a nonunion worker.
What is the out-ofpocket maximum?
Workers must continue to pay
for a percentage of their medical care cost until they reach the
yearly out-of-pocket maximum.
Eighty-one percent of workers
with fee-for-service plans have an
OCTOBER 2010 • PROGRAM PERSPECTIVES
3
GLOSSARY
Fee-for-service health care plan. In
fee-for-service plans, a premium is paid
to a private insurance carrier to provide
a specific package of health benefits. The
plan only finances, it does not deliver, the
health care services. Some employers may
choose to self-fund a fee-for-service plan
in which case the employer, as opposed to
an insurance company, assumes responsibility for payment of physician or hospital
services.
In-network provider. An in-network
provider is a group of hospitals and
physicians that contract with an insurance company to provide comprehensive
medical services. Many plans require the
plan participant to go to these providers
to get coverage. Other plans will allow
the participant to receive medical services
outside the network from out-of-network
providers at a higher cost. Preferred provider organizations, point-of-service, and
exclusive provider organization medical
plans will have incentives, and in some
cases, require the participant to use innetwork providers. A traditional fee-forservice plan will not have a network, so
patients may visit the physician or hospital
of their choice.
Access to a benefit plan. Employees are
considered to have access to a benefit plan
if it is available for their use. For example,
if an employee is permitted to participate
in a medical care plan offered by the
employer, he or she is placed in a category
with those having access to medical care,
regardless of whether he or she chooses to
participate.
Deductible. The deductible is the amount
of covered expenses that an individual or
family must pay before any charges are
paid by the medical care plan. Deductibles
that apply separately to a specific category
of expenses, such as deductible for each
hospital admission, are excluded.
Coinsurance. Coinsurance is the percentage of covered health care costs that the
plan pays during the plan year until the
participant reaches the out-of-pocket
maximum.
Out-of-pocket maximum. The out-ofpocket maximum is the annual limit of
covered expenses that a participant or
family must pay after the deductible has
been satisfied. Once reached, covered expenses are fully reimbursed by the insurer
for the rest of the year.
www.bls.gov/ebs
U.S. BUREAU OF LABOR STATISTICS
PERSPECTIVES
TABLE 2
ROGRAM
Median coinsurance rates for fee-for-service plans,
private industry, National Compensation Survey,
2008, in percent
Variable coinsurance
Fixed
coinsurance
In-network
Out-of-network
80
80
60
Union workers
80
85
70
Nonunion workers
80
80
60
Full-time
80
80
60
Part-time
80
80
60
Characteristic
All workers
VOL. 2, ISSUE 5
FEE-FOR-SERVICE PLANS
OCTOBER 2010
By bargaining status
Features and associated
costs of fee-for-service
medical plans
By full-time/part-time status
annual individual out-of-pocket
maximum. For all private industry
workers, the median individual
out-of-pocket maximum is $2,000,
and the 10th to 90th percentile
values are $800 and $3,500,
respectively. (See table 1.) The
median individual out-of-pocket
maximum for full-time workers
is $2,000, and the median family
out-of-pocket maximum is $4,000,
while for part-time workers the
median is $1,700 for individual
and $3,500 for family. Union
workers have a median individual
out-of-pocket maximum of $1,750
and a median family out-of-pocket maximum of $4,000, while the
median for nonunion workers is
$2,000 for individual and $4,000
for family. Once the out-of-pocket
maximum is reached, the insurer
pays all covered expenses until
the end of the plan year. ●
The next Program Perspectives will feature
defined contribution retirement plans.
For additional assistance on
benefits, contact one of our
information offices:
REGIONAL:
ATLANTA
(404) 893-4222
NATIONAL: WASHINGTON, DC
BOSTON
(617) 565-2327
(202) 691-6199 TDD: (800) 877-8339
[email protected] www.bls.gov/ebs
CHICAGO
(312) 353-1880
NEW YORK
(646) 264-3600
NATIONAL
COMPENSATION
SURVEY
www.bls.gov/ ebs
Benefit Series
HEALTH
PAID LEAVE
RETIREMENT
BY WAGE LEVEL
SICK LEAVE
PHILADELPHIA
(215) 597-3282
DEFINED-BENEFIT PLANS
SAN FRANCISCO
(415) 625-2270
DEFINED-CONTRIBUTION PLANS
COMBINED BENEFITS
DALLAS
(972) 850-4800
KANSAS CITY
(816) 285-7000
I
n 2008, medical care benefits
BUREAU OF LABOR STATISTICS
U.S. DEPARTMENT OF LABOR
FEE-FOR-SERVICE
PLANS
FEE-FOR-SERVICE
PLANS
LIFE/DISABILITY INSURANCE
were available to 71 percent
of private industry workers
through their employers. Feefor-service medical plans make
up the majority (78 percent)
of employer provided medical
plans in private industry. Health
maintenance organizations
(HMOs) (both traditional and open
access) make up the remaining 22
percent. This issue of Program
Perspectives takes a closer look
at the components of private
industry fee-for-service plans and
what the typical provisions and
costs are for each component.
Fee-for-service medical plans
come in several forms, the most
common type is preferred provider
organizations (PPOs), but other
forms include point-of-service,
exclusive provider organizations,
and traditional plans without
networks. In addition to annual
premiums (the costs of which are
usually shared by employer and
employee), a fee-for-service plan
typically requires the worker to
pay an annual deductible before
the plan pays for medical coverage.
After the deductible is reached,
the medical plan pays a percentage
of costs, called coinsurance, and
the worker must pay the health
care provider the remaining
percentage until the worker
reaches an annual out-of-pocket
maximum, after which the plan
pays 100 percent of most charges.
This issue includes median costs
(the point where half of the workers have a cost that is at or below
that level and half of the workers
have a cost that is at or above that
level) and percentiles—rather than
averages—because averages are
continued inside
►